How to Innovate in a Hypersocial World: Q&A with Gail Goodman, CEO of Constant Contact

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Constant Contact is a digital marketing company led by babes. I don’t mean women, though that is true, actually. And I don’t mean babies in the crying, needy, or naïve sense, but rather the youngest-in-the-family sense.

Let me start over. As it turns out, many of the senior management team of Waltham, MA-based Constant Contact (NASDAQ: CTCT) grew up as the baby of their family, and they had older siblings who influenced their worldview. And that has impacted the culture of the company in an important way.

That was one of the more interesting things I learned last week from speaking with Gail Goodman, the company’s CEO and chairman (and youngest of four). She has been CEO since 1999 and led the company’s $107 million IPO in 2007. For those who don’t know, Constant Contact started in the mid-1990s (originally called Roving Software) and rose to become a leader in e-mail marketing and online surveys for small businesses. Now 815 employees strong, it anchors a vibrant hub of marketing-tech-related firms in the Boston area.

Like most young public companies, though, Constant Contact faces challenges in continuing to innovate while staying focused on increasing its profits. The firm made $174.2 million in revenue in 2010—a 35 percent increase over the previous year—and a modest profit of $2.9 million. But its percentage growth has been slowing down over the past couple of years, and the company is investing in newer areas like social media and mobile marketing—to the tune of $24 million spent on R&D in 2010.

Earlier this month, Goodman presided over an annual “innovation day” at the company. Employees were encouraged to submit innovative new ideas for products and processes, and five finalists were selected out of a pool of 33 project ideas, she says. (The finalists weren’t revealed, but two had to do with mobile, and two had to do with “customer wow experiences,” she says.) There will be a final bakeoff in late August, with the overall winner to be implemented by the company by the end of the year.

But Goodman (see below) had a lot more to say about what’s happening at Constant Contact these days. Here’s an edited transcript of our chat:

Xconomy: It’s a perennial question, but how does a mid-size public company like Constant Contact continue to innovate?

Gail Goodman: It actually starts with making sure everyone knows they’re paid to think and to innovate. It all starts with an attitude: what else cool can we do? It helps that we innovate with context. Everyone here is really clear about who our target audience is—small businesses, small associations. We have more than 450,000 customers, and 70 percent of them have fewer than 10 employees. Our innovation needs to be highly usable cool technology. Everyone knows the problem set we’re trying to work on. We help [businesses] create and grow customer relationships. We talk about it a lot. And employees use 10 percent of their time to innovate.

X: So what are you doing that’s unique or special?

GG: We have a Labs organization, and we did that earlier than most companies. That’s where some larger companies get stuck. How do you invest in the future? We keep a running strategic roadmap, with a multi-year focus that has technology disrupters on it—here are things coming that could disrupt our market and customers. We continue to role play, we continue to do late-night pizza sessions.

One example: we have a fantastic “big data” problem. We have 450,000 customers, all of … Next Page »

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang